Market Driven vs. SOE

Market-driven brands growing faster in value, but SOEs still dominate

Market-driven brands grew at a faster rate than SOEs (State Owned Enterprises) in number of brands and brand value, although SOEs still dominate the BrandZ™ Top 100 Most Valuable Chinese Brands in total value.

In the 2014 BrandZ™ Top 100 Most Valuable Chinese Brands, 45 SOEs comprise 71 percent of the ranking’s total value, while 55 market-driven brands make up 29 percent. But market-driven brands in the Top 50 grew 27 percent in brand value in the 2014 ranking, while SOE brand value appreciated 9 percent. Because the ranking expanded this year from 50 to 100 brands, year-on-year comparisons are possible only for the Top 50.

Among the Top 50, the brand value growth of market-driven brands increased steadily over the past four years, while SOE brand value fluctuated. Over the same period, the brand contribution of the market-driven brands increased and SOE brand contribution fluctuated and ultimately declined slightly, according to BrandZ™ analysis. Brand contribution is a BrandZ™ metric of the influence of brand alone, stripped of other factors like financials.

The growth of market-driven brands becomes even more apparent when the SOEs are divided into two subgroups according to their focus on brand building. BrandZ™ analysis divides SOEs into Competitive SOEs (FMCG, consumer-facing brands or other brands that depend on brand contribution to compete); and Strategic SOEs, (major banks or energy companies tasked with implementing national policy).

Competitive SOEs comprise 9 percent of the 2014 ranking. When combined with the 29 percent share held by market-driven brands, the total 38 percent of brand value begins to balance the 62 percent share of value claimed by Strategic SOEs. In addition, market-driven brands outnumber SOEs two-toone in the portion of the ranking added in 2014, with only 16 SOEs, compared with 34 market-driven brands ranked 51-to-100.

Implications: The market-driven brands in the BrandZ™ Top 100 Most Valuable Chinese Brands will continue to increase in number and value and their growing brand equity should stabilize them against economic ups and downs. China’s rebalancing, the shift to a consumer driven economy and less government investment in infrastructure and other projects, suggests that the Strategic SOEs will need to adopt brand-building strategies.

BrandZ China Top 100 2014

BrandZ China 2014 Report Top 100 Report
English | Chinese

Top 100 Chart
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2014 BrandZ China Top 100 Infographic

BrandZ China 2014 Infographic

Methodology and valuation by Kantar Millward Brown

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